Should I surrender Jeevan Saral?

I have a Jeevan Saral policy. I have been holding it for the last six years. It is a 10-year plan. Is it beneficial to continue or surrender?
- Sippy Dasgupta

LIC Jeevan Saral is an endowment policy which is silent on its expenses just like other plans in this category. Though you will make losses on surrender, it is not wise to continue investing in a bad product. Such insurance-cum-investment plans typically offer a very small insurance cover and they also offer very modest returns.

The surrender value will be the greater of the guaranteed surrender value and special surrender.

Guaranteed surrender value will be equal to 30% of the total amount of premiums paid excluding the premiums for the first year and all the extra premiums and premiums for accident benefit / term rider.

Special Surrender Value will be 100% of the Maturity Sum Assured, if five or more years' premiums have been paid. The Maturity Sum Assured for this will be the Maturity Sum Assured corresponding to the term for which premiums have been paid under the policy.

Do not mix your insurance and investment needs in future. Always buy a pure term life insurance to buy an adequate life insurance cover. Term insurance products are ideal to buy a life insurance cover because they have very low premiums.

This article was originally published on March 09, 2016.